GCC market capitalisation declines to $944.1b in Sept
Dubai - Non-oil revenues of most Gulf nations rose over past years
The combined market capitalisation of all GCC bourses declined 0.7 per cent month on month in September to $944.1 billion as markets closed broadly lower, weighed down by volatility in oil prices, uncertainty over the timeline of the Fed's interest rate hike, and concerns of sluggish growth in Asia, especially China, Global Investment House said.
The Saudi market which recorded a 1.5 per cent fall, still accounted for the largest share of $443.6 billion or 47.0 per cent. Qatar accounted for $167.1 billion (17.7 per cent), Abu Dhabi and Dubai contributed $204.6 billion (21.7 per cent), and Kuwait, Oman and Bahrain contributed $128.8 billion to the total.
The Dubai Financial Market registered the most decline of 1.9 per cent month on month, followed by Bahrain Stock Exchange (-1.8 per cent), Kuwait Stock Exchange (-1.6 per cent), TASI (-1.6 per cent), Muscat's MSM30 (-1.4 per cent) and Qatar's QE (-0.9 per cent). Abu Dhabi was the sole gainer with a 0.2 per cent month on month increase.
In the UAE, five sectors ended in the green, two remained flat, and four closed lower. The gains were led by telecommunication (10.5 per cent month on month), followed by Real Estate (3.7 per cent), Industrial (2.7 per cent), Consumer (2.2 per cent), and Energy (1.1 per cent). Health Care and Construction remained flat. Among the losers, Services (- 5.2 per cent) declined the most, followed by Banks (-3.2%MoM), Investment & Financial Services (-2.6%MoM) and Insurance (-2.4 per cent). Growth in the Real Estate sector was led by gains in Aldar Properties (3.0 per cent), Eshraq Real Estate (6.4 per cent), and RAK Properties (8.9 per cent).
Gains in the Industrial sector were driven by an increase in Ras Al Khaimah Ceramics Co (7.8 per cent) and Ras Al Khaimah Cement Co (4.7 per cent). This was partly offset by weakness in Arkan Building Materials Co (-10.5 per cent). The Telecommunication sector was boosted by a gain in Emirates Telecommunication Corp (10.5 per cent), whereas Sudan Telecommunication ended flat.
The fall in the Banks sector was ascribed to Abu Dhabi Commercial Bank (-4.4 per cent), First Gulf Bank (- 2.8 per cent), Invest Bank (-14.7 per cent), and National Bank of Abu Dhabi (-8.5 per cent). The fall in these stocks was partly offset by a gain in Union National Bank (3.4 per cent), Commercial Bank International (3.3 per cent), and National Bank of Fujairah (14.0 per cent).
The Investment & Financial Services sector ended lower due to a decline in Waha Capital (-2.6 per cent), whereas Al Khaleej Investment Co. ended flat.
Trading across GCC markets declined in September. The volume traded fell 12.6 per cent, as trading volumes across markets remained low owing to Eid holidays. The -value traded declined 10.7 per cent month on month due to decline in trading volume in Kuwait, Oman, Saudi Arabia and the UAE. Market activities were subdued, with the GCC markets closed for Eid.
While Kuwait's fiscal deficit and continued delisting dampened investor sentiment, Fitch's decision to lower its outlook for Saudi Arabia's foreign and local currency issuer default ratings to 'negative' from 'stable' aggravated the concerns, Global's analysts said.
"We expect the outlook for GCC economies to remain positive in the long term, supported by stable growth in infrastructure expenditure and diversification into the non-oil sector. Moreover, local governments are committed to essential developmental activities in order to diversify their economies away from oil," they said.
Non-oil revenues of most GCC nations increased over the past few years, and the trend is expected to continue in the coming years. With oil prices expected to remain volatile, GCC economies could suffer a setback in the near term, the report said.
However, the long-term outlook for GCC economies remains stable, as oil dependency is projected to reduce gradually.